Analysis Finds Decline in Number of Critical Audit Matters

The PCAOB published post-implementation review (PIR) reports on its recent pronouncements on critical audit matters (CAM) and estimates and specialists which found that the average number of CAMs has declined over time and the proportion of auditor’s reports that have a single CAM has increased. This is the second interim analysis of CAMs. The staff issued the first interim analysis in October 2020. At the time, the board said that some investors find CAMs to be beneficial, and there was no evidence of significant unintended consequences. In response to investor demand to make the audit report more useful, the PCAOB issued the requirement for CAMs in June 2017 (Release 2017-001, “The Auditor’s Report on an Audit of Financial Statements When the Auditor Expresses an Unqualified Opinion and Related Amendments to PCAOB Standards”). The rule represented the most major change to auditor reports in decades. “Although results from large-sample statistical analysis do not suggest that investors, on average, respond to the information in CAMs, 80% of investors who read CAMs said that they are using CAMs to identify key financial reporting risks,” the report stated. “This suggests that investors may still be learning how to find value-relevance in the information content of CAMs, which adds to the total mix of available information investors use in making investment decisions.” The board will prepare a more comprehensive PIR in the future.

Staff Extends Comment Deadline on Proposed Meta Model Relationships

The FASB staff has extended the comment period on proposed meta model relationships designed to convey base-level accounting model relationships in Extensible Business Reporting Language (XBRL). The original comment period on the October 2022 Invitation to Comment, “Proposed Meta Model Relationships” ran to January 10. It has been extended to May 11, 2023. XBRL is a machine-readable data format used in financial reports. Today, the XBRL relationships provide presentation, syntax, and validation. The FASB staff wants to receive input on whether eight proposed meta model relationships have utility in practice, with the objectives of assisting preparers in identifying the proper elements for tagging their filings, assisting data users in the consumption of data, and driving the business rules that leverage this information to help with proper element selection and identification.


Blueprints for New CPA Exams Released

The AICPA has unveiled updated Uniform CPA Examination Blueprints. This is the official document of content eligible for assessment on the CPA exam. This comes as the AICPA is modernizing the CPA Exam through a project knowns as the CPA Evolution. The blueprints are based on the knowledge and skills required of a newly licensed CPA. The AICPA said that today’s CPAs must have deeper skillsets and competencies as well as more knowledge of emerging technologies and their impact on tax, accounting, and audit. To prepare CPA candidates and accounting students for this new environment, the licensure model is changing through a joint CPA Evolution initiative between the AICPA and the National Association of State Boards of Accountancy (NASBA). “The CPA Exam has evolved to align with a digital-driven marketplace, and that means a greater emphasis on technology and analytical skills,” Susan Coffey, AICPA’s chief executive officer of public accounting, said in a statement. “Through CPA Evolution, new Exam candidates will gain the skills and competencies they need to better meet the public’s, clients’ and employers’ needs. Candidates will also have the flexibility to choose their preferred area of focus within the multitude of career paths available in the profession.”

Under the new licensure model, CPA candidates must take three core sections:

  • Financial Accounting and Reporting
  • Auditing and Attestation
  • Taxation and Regulation

Candidates must then choose a discipline to demonstrate additional knowledge:

  • Business Analysis and Reporting (BAR)
  • Information Systems and Controls (ISC)
  • Tax Compliance and Planning (TCP)

The revised exam will be rolled out in January 2024. The last day to take current CPA exams is expected to be December 15, 2023.